"B.C. Policy Perspectives" is the web log of Mark Crawford. THE PURPOSE OF THIS BLOG IS NOT PARTISAN OR IDEOLOGICAL. INSTEAD, I TRY TO IDENTIFY POSITIONS AND PERSPECTIVES THAT ARE NEGLECTED, DROWNED OUT OR UNDERREPRESENTED ELSEWHERE. Some politicians and journalists have found it helpful and interesting, and I hope that you do, too!
This blog is linked to BOURQUE NEWSWATCH, THE TYEE, THE SIGHTLINE INSTITUTE, and The MARK NEWS. Check them out!!

Tuesday, January 15, 2013

REVIEW: What Money Can't Buy by Michael J. Sandel

Robert Fulford's year-end musing in The National Post, "2012, the year when money somehow became unpopular" contains a predictably jaundiced view of two recent scholarly works about contemporary capitalism, What Money Can't Buy: The Moral Limits of Markets by Harvard Political Theorist Michael J. Sandel, and How Much is Enough? Money and the Good Life, by Robert and Edward Skidelsky. (Since I have not read the latter work, I shall not comment upon it.)

But I have read Sandel's book and have found it to be eminently readable, illuminating, and persuasive. It has helped me to clarify my views on several subjects. I heartily recommend it to every educated lay person who wonders about the limits of economic imperialism in social science and philosophy and about the limitations of market-based institutions or policies. I shall start with a summary of Sandel's arguments and then briefly address Fulford's objections.

Sandel begins with a survey of practices that have become commonly accepted in the era of market triumphalism: "[t]he reach of markets, and market-oriented thinking, into aspects of life traditionally governed by nonmarket norms is one of the most significant developments of our time...the uses of markets to allocate health, education, public safety, national security, criminal justice, environmental protection, recreation, procreation, and other social goods were for the most part unheard of thirty years ago" (p.7-8). Examples abound: prisoners paying for cell upgrades; solo drivers pay to drive in car pool lanes; wealthy foreigners are eligible for green cards; line-standing companies queue on behalf of busy (or wealthy concert-goers); the right to emit carbon can be purchased on the open market; and the burgeoning market in viaticals and corporate-owned life insurance policies.

So why should we worry? Sandel adduces two general reasons. The first is inequality. "[A]s money comes to buy more and more --political influence, good medical care, a home in a safe neighbourhood rather than a crime-ridden one, access to elite schools rather than failing ones--the distribution of income and wealth looms larger and larger. Where all good things are bought and sold, having money makes all the difference in the world." This is an important insight: it may not be inequality per se that is harmful, but rather the way in which the commodification of everything makes those inequalities matter more.

The second reason is more subtle and insidious: "the morally corrosive tendency of markets"(p.9). Markets don't just allocate goods: they also express and promote certain attitudes towards those goods in ways that change them. And in certain cases, this can largely corrupt the goods in question. This latter point is probably the most important one in the book. For Sandel is not simply reporting his own attitude towards the "cash nexus" (this is what conservatives like Fulford too often assume is going on). Instead, he persuasively argues that it is the goods themselves that are being transformed. And this exposes the Achilles Heel of economic theory whenever it is applied outside the realm of ordinary material goods. For the power and prestige of economic thinking relies to a great degree on the assumption that markets do not affect the goods they exchange. True enough, when the goods are household products, manufactures or widgets; even ordinary commercial services. But other goods--education, health, even access to cultural goods--involve values that can be corrupted or crowded out by market values whenever they are freely bought and sold on the open market.

Sandel shows how some of the most influential economists of recent times have overlooked this danger in their zeal to extend the reach and power of economic theory and method. Gary Becker, whose book The Economic Approach to Human Behaviour (1976) was a clarion call to provide all of social science with a "sturdier foundation" focused on income and price effects, blamed all resistance to this notion on either sentimentality (as when he applied economic analysis to marriage and divorce) or ignorance (about the pervasiveness of cost and benefit calculations in every area of activity). No doubt Becker had a point. But so too does Sandel: for rendering the 'implicit' prices associated with sex, marriage, education environmental protection , political participation and human health explicit may not always improve the way we reason about these non-material or quasi-material goods. It may also narrow and degrade these conversations to the point that they are no longer conversations at all.

This book persuasively argues that of the two kinds of objections to markets--the fairness objection that market choices reflect inequality, and the corruption objection that points to the degrading effect upon certain moral and civic goods and practices if they are bought and sold--the first objection is widely if not quite sufficiently recognized in policy literature. But the second has been greatly under-appreciated, probably because these objections are assumed be merely grounded in moral preferences. This may not be true: "A growing body of research confirms what common sense suggests: financial incentives and other market mechanisms can backfire by crowding out nonmarket norms. Sometimes, offering payment for certain behaviour gets you less of it, not more" (p.114). Sandel gives three great examples of this phenomenon: the support for nuclear waste sites that went down in Switzerland after communities started being paid for it instead of being called upon to exercise their civic duty; the increase in late day-care pickups in Israel after fines were introduced, because parents reasoned that they were now paying teachings and daycare workers to work late; and the unpaid volunteers who were more successful in fund-raising than those who were paid commission (pp.114-120).

Two tenets of market faith need to be re-assessed.The first is that commercializing an activity doesn't change it. This allows for the straightforward application of pareto effciency: if a previously untradable good is made tradable, those who wish to buy and sell to their mutual advantage will do so, while everyone else is made no worse off--as Kenneth Arrow once said, "Why should the creation of a market for blood decrease the altruism embodied in giving blood?" (p.126). Sandel's response: because "commercializing blood changes the meaning of it". In a world where blood is routinely bought and sold , giving blood might even be considered an unfair labour practice, depriving a poor person of a source of income.

The second tenet of market faith that is too prominent in economic theory according to Sandel is that ethical behaviour is a commodity that needs to be economized. One example of this reasoning is Arrow's article on blood supply, in which he argues for markets on the grounds that markets spare us from using up society's scarce resources of altruism, generosity, civic virtue, and solidarity. Other examples are Sir Dennis Robertson's address to Columbia's bicentennial in 1954, which defended economics on the ground that the economist can contribute mightily to society by saving it from squandering its scarce supply of virtue and economizing "that scarce resource Love"(128); and Lawrence Summers offer of morning prayer in Harvard's Memorial Church. Summers, a respected economist, offered a standard utilitarian account of the common good and argued, pace Arrow and Robertson, that reckless expenditures of altruism in economic and social life reduce the amount that we have left over for other public purposes, for our families and our friends. Yet Sandel is surely right to argue--pace Aristotle and Rousseau--that, on the contrary,"altruism, generosity, solidarity and civic spirit are not like commodities that are depleted with use. They are more like muscles that develop and grow stronger with exercise. ...To renew our public life we need to exercise them more strenuously"(130).

The problem with Fulford's commentary on this book is that it does not fully confront either Sandel's most fundamental arguments or his evidence. Fulford does score a point in noting that Sandel happily serves at Harvard as “Anne T. and Robert M. Bass Professor of Government,” (Bass being a Fort Worth oil billionaire who has a supersonic corporate jet in development). But Sandel is not arguing that naming rights shouldn't be sold; he is merely drawing attention to how much more frequent it has become in the last three decades and asks whether it has become excessive. Fulford writes: "Sandel believes business has exceeded its “moral limits” but he avoids defining them and instead provides flagrant examples of wretched excess. ...Sandel doesn’t know how to limit capitalist excesses but hopes someone will think of something." I think this is unfair. Sandel has contributed mightily to clarifying arguments against vouchers, for example, since they speak to the inequality argument but not to the corruption argument.. "Both Sandel and the Skidelskys mention that capitalism greatly improves material conditions but they admit it grudgingly, as if under torture. In neither book does trade of any kind appear noble, like university teaching. It is a necessary evil if it is in fact necessary at all." This is not only unfair; insofar as it applies to Sandel, it is absolutely untrue. He understands and appreciates the value of capitalism and of the market economy. Capitalism is virtuous as well as effective within its sphere. That we should strive to have a market economy, without completely marketizing all of society in the process, is what Sandel has clearly demonstrated. And along the way, he has exposed the biggest ideological and intellectual roadblocks to that democratic project.

Subscribe To

Twitter Feed

Followers

RSS Feed

B.C. Policy Perspectives

Visitors to this Blog since February 11, 2010

The following text will not be seen after you upload your website,
please keep it in order to retain your counter functionality
Free TrackersHelp

On Knowing (1)

"The most perfect philosophy of the natural kind only staves off our ignorance a little longer: as perhaps the most perfect philosophy of the moral or metaphysical kind serves only to discover larger portions of it." ---David Hume

On Knowing (2)

"Everyone takes the limits of his own vision for the limits of the world."--- Arthur Schopenhauer

On Knowing (3)

"There is no a priori reason for thinking that the truth, once discovered, will necessarily prove interesting."---C.I. Lewis